Durham County Commissioners approved a property tax increase of three cents per $100 valuation for the coming fiscal year, bringing the rate to 75.22 cents. The modest increase—smaller than previously warned—will raise taxes by approximately $75 annually on a $250,000 home, but only because the county benefited from an unexpected 20 percent surge in sales tax revenue. County Manager Keith Straw cautioned commissioners not to budget future years around this windfall, warning that sales tax growth of the magnitude seen this year is unsustainable and next year could bring only 3 to 5 percent growth or even decline if a recession hits.
Despite revenue growth of $35.8 million from natural growth alone, the county still needed to cut $2.5 million in operations to balance the budget, underscoring Straw's concern that growth may not continue. The county also warned that $12 million in Medicaid hold-harmless revenue—money returned by the state when sales tax exceeds Medicaid costs—could evaporate in an economic downturn, particularly if more people qualify for Medicaid under pending state expansion.
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